Experts ask: Is Verizon ignoring data overage complaints nationwide?

CLEVELAND, Ohio -- Lou Orlando of Massillon, Ohio, has a choice: He can pay his Verizon cellphone bill or he can buy groceries. He can no longer do both.

Orlando's family has been hit with more than $2,500 in cellphone data overage charges since July. Last month, Verizon said the 51-year-old went over his data plan by 154 gigabytes. That's how much data you'd use if you weren't on Wi-Fi and you scrolled Facebook and your email on your phone 57 hours a day, every day, for a month.

Yes, 57 hours a day.

For Michele Zatorski of Poquoson, Virginia, her problems also started in July with $200 in overage charges. Then last month she had a $1,417 bill. Down in Conway, South Carolina, Liz Oberlin has amassed data overage fees totaling $1,500 in recent months. Cassandra Smith of Kentwood, Michigan, has had issues with Verizon for months. Her most recent bill included $555 in overage charges. Bill Smartt on Thursday paid Verizon $780 for his latest bill, more than twice as high as normal.

"That's a darn week's work," said Smartt, who lives near San Francisco. "Not only was this a financial burden, my family has been fighting and pointing fingers at each other for weeks."

For each of these tales, there are thousands more like them that involve Verizon customers who say they're paying unexplained data overage charges, ranging from $15, to thousands of dollars. Since a Sept. 9 Plain Dealer story about data over-limit charges, more than 5,000 consumers nationwide have contacted the newspaper about head-scratching increases in data consumption on their smartphones. A handful of people are upset about AT&T, but the overwhelming majority of people are reaching out about Verizon.

The question begs: If the nation's largest wireless carrier is seeing spikes in customer complaints about one issue -- data overages and the accompanying fees -- and spikes in revenue for that one line item -- would executives notice?

Michael Hodel, a financial analyst with Morningstar Inc., who follows the stock of Verizon and other wireless carriers, said Verizon would absolutely see these sorts of increases in complaints and in revenue. "They would definitely know it," he said.

Enterprises such as Verizon Wireless, the 13th-largest company in the nation, are good at counting the beans. With 112 million customers, Verizon knows the average revenue per customer, the percentage of customers with smartphones, how many converted to new data plans, and more, Hodel said.

"They're monitoring that information monthly, weekly, daily," he said. "That's the nuts and bolts of their business."

"Of course they saw (the spike in overages),'' agreed Mark Del Bianco, a Washington, D.C., attorney with decades of experience handling cases in the telecom industry. "That's one of the factors that they take into account for pricing and capacity plans.''

Officials at New Jersey-based Verizon haven't returned The Plain Dealer's multiple requests for comment by phone and email. Two weeks ago, Verizon spokesman Steven Van Dinter and Customer Service Supervisor Dama Galceran, who works in the company's executive offices, said they weren't aware of any widespread complaints or problems with skyrocketing customer bills.

Rob Carrillo said he is surprised Verizon officials couldn't hear him yelling all the way from California. Carrillo, whose family has three phone lines, also started seeing growing bills this summer, reaching $1,600 last month.

"Verizon says we have gone over our data every month," Carrillo said. "So we add more data every month and still go over. Enough is enough."

Some customers say they burn through data at a pace of 6 gigabytes an hour at times, which is more than many families use in an entire month. Other customers say their old flip phones are suddenly using data. Or phones belonging to people who've died are using data. Or they're racking up gigabytes at night when they're sleeping. Nearly everyone who has contacted the newspaper says their normal usage has doubled or tripled in recent months.

Colleen Boothby, a telecommunications regulatory lawyer in Washington, D.C., said it would be difficult to miss sudden spikes in usage.

"If it is across geographic lines and substantial, it should set off alarm bells,'' said Boothby, a former lawyer for the Federal Communications Commission, which regulates wireless companies.

"That kind of dramatic change would cause you to take notice," Boothby said, "if for no other reason than you would want to keep it going."

"How could they have missed it? It's simple,'' said Bruce Kushnick, the executive director of New Networks Institute in New York City, which tracks and analyzes communications companies and services. "Management simply wanted to make money. They would say, 'Oh, we're making more money. The complaints? Oh, they're anomalies.' ''

That's what has infuriated so many Verizon customers: Being told they're the only ones with data problems.

Michael Dorminey of Columbus, Georgia, is chewing through data twice as fast as he ever did, and the problems started immediately after he changed to a new plan that Verizon pitched him.

"When I call Verizon, they state they have never heard a complaint regarding this over data usage," Dorminey said. "I am sure people have called and complained besides me, right?"

Yes, they have. People have been been complaining to Verizon and, now, to the FCC. The number of wireless billing complaints filed with the FCC ballooned this month, as customers submitted 2,656 grievances from Sept. 1 through Sept. 22, according to a Plain Dealer analysis of the commission's online data. In the same time period last year, 746 such complaints were filed. That's an increase of 256 percent.

This summer, the reports to the FCC began to climb. In July, customers filed 1,154 protests; in August, they submitted 1,230. The numbers began spiking Sept. 9 when The Plain Dealer wrote its first news story about the apparent scope of Verizon data overages. The FCC online data does not break down the number of complaints by individual companies.

Zatorski, the Virginia woman with the $1,417 bill last month, said she has had exhaustive conversations with Verizon after they said her usage inexplicably jumped from 15 gigabytes to 41. "I spoke with several reps and they cannot provide an answer. But they so generously gave me a $50 credit and a payment plan."

Howard Fencl, vice president at Hennes Communications, a Cleveland-based crisis communications firm, said many companies that want to do right by customers and protect their reputation will offer customers "one-time forgiveness" when there's an outrageous charge or possible error, possibly even if the customer is at fault. In Verizon's case with these summer spikes, refunds "would be a good practice," Fencl said.

Back in Massillon, which is south of Cleveland, Lou Orlando said the manager of the local Verizon store just this week told his family they're the only ones complaining about increased data use.

When Orlando initially questioned his most recent bill and overage charges, he said he asked for an itemized bill that would explain where the data went, what apps supposedly used it and on what days. "They just said, 'This is your bill and it's right.'"

Orlando, who shares the plan with his 73-year-old mother and his own 16-year-old son, said it's his phone -- not his son's -- that Verizon claims is devouring data. After doling out more than $2,500 since July, Orlando said he has started to cut back on groceries to absorb the overages.

He works in pest control and is on the road all day taking care of clients and fielding calls. He couldn't make a living without his phone. "Your phone is your connection for money. You're a prisoner -- you have to pay your bill," Orlando said.

Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group in Washington D.C., said he believes that top officials of Verizon knew of the recent spikes in data.

"It's very clear to me that the Federal Communications Commission needs to speed up its investigation and hold Verizon accountable with significant monetary penalties, not just for making mistakes, but for telling their customers that it didn't make any mistakes,'' Mierzwinski said.

"It's obvious that Verizon is blaming its customers for its own incompetence. Their customers couldn't have increased their data that much.''

He cited the case The Plain Dealer highlighted of a customer who went from 4 gigabytes of data in a month to 36 gigabytes.

"That's absurd,'' he said.

And that case is one of the tamer ones. Many customers say they've gone from 2 gigabytes to 24, or from 16 gigabytes to more than 60, according to Verizon's billing records.

Patrick Nolan, a network engineer and computer and network security expert in Washington, D.C., said he believes Verizon may have experienced some kind of software snafu in one part of its billing system. That would explain why some customers are affected, but others aren't. It's common for companies to frequently update their software and equipment, he said.

"It's entirely plausible that something has gone haywire in those systems or their process to continually improve their systems, and they either have not noticed or have not been able to locate and fix the problem," said Nolan, president of IT Services Group. "Or perhaps the folks responsible are not aware users are having an issue. Nothing surprises me anymore."

"The suits at Verizon headquarters have to be aware of this,'' he said. "But the low-level people answering the phones haven't been given the authority to waive customers' fees. It is typical of the big phone companies. They take the customers' money and avoid fixing problems.''

Susan Grant, director of Consumer Protection and Privacy for the Consumer Federation of America in Washington, D.C., said it's easier for consumers to receive incorrect bills on things like their cellphones because data usage -- unlike minutes spent talking on the phone -- is abstract.

"When you have so many complaints from so many people and such large amounts, you begin to see there must be a problem on Verizon's end," she said.

Fencl, the crisis communications expert, said that if Verizon were his firm's client, he'd advise the company to start getting out in front of the problem.

First, Fencl said, the wireless powerhouse should put out a statement acknowledging the complaints and promising the company will dedicate all available resources to resolving issues for every single customer.

Second, the company should commit to doing a better job educating customers about how data usage works. And if Verizon really wants a "reputation win," it should vow to "reinvent the billing system" to set a new standard of transparency for the industry, he said.

While it's not yet publicly known how widespread the problem is, even if it's limited to 5,000 or 10,000 people, "I'd be worried about it if I were Verizon," Fencl said. With social media today, something like this can take off, he said.

"I think they're in for more reputational trouble than they would ever think they'd have," he said.

Plain Dealer reporters John Caniglia and Jo Ellen Corrigan contributed to this report.